General Dynamics Wins $25M Deal to Support Submarine Platform

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General Dynamics Corp. ‘s GD Electric Boat division recently secured a $24.8-million modification contract for providing engineering and technical design support services related to the undersea technology for current and future submarine platforms. The deal has been awarded by The Naval Sea Systems Command, Washington, D.C.

Details of the Deal

Per the contract, the Electric Boat unit provides advanced submarine research and development, including studies to support manufacturability, electronic obsolescence, manning, hull integrity, weight/margin and stability. In addition, it will also offer studies to support main and auxiliary machinery systems, fluid systems, acoustics, non-acoustics, hydrodynamics, ship control, submarine safety and logistics.

Work is scheduled to be completed by October 2019, and will be performed in Groton, Connecticut, and Newport, RI.

What Favors General Dynamics?

General Dynamics enjoys a dominant position as a Navy contractor, being one of the only two contractors in the world equipped to build nuclear-powered submarines. Moreover, the United States is strategically strengthening its naval power by upgrading missile submarines, due to the rising widespread geo-political tensions across the world.

Inevitably, the demand for its technical expertise, support services and other services required for the proper functioning of submarines also remains high. As a result, defense contractors like General Dynamics largely benefit from a rise in demand for submarines and its associate services.

Looking Ahead

Per Market Research Future firm, the global submarine market is expected to see a 4.24% CAGR from 2018 to 2023. This, in turn, will increase the demand for services required to upgrade different submarines. As submarines remain a vital part of the U.S. navy fleets imperative in combat, surveillance, counter-surveillance and other missions, submarine manufacturers like General Dynamics will certainly benefit from such developments.

Price Movement

General Dynamics’ stock has lost 12.9% in the past year, against the industry ‘s decline of 0.9%. The underperformance may have been caused by the intense competition the company faces in the aerospace-defense space.

Zacks Rank & Key Picks

General Dynamics currently carries a Zacks Rank #3 (Hold).

A few better-ranked companies in the same sector are Aerojet Rocketdyne Holdings AJRD . Raytheon Company RTN and The Boeing Company BA .

While Aerojet Rocketdyne sports a Zacks Rank #1 (Strong Buy), Raytheon and Boeing carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here .

Aerojet Rocketdyne came up with average positive earnings surprise of 19.27% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has increased 43.3% to $1.82 in the past 90 days.

Raytheon delivered average positive earnings surprise of 6.71% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has moved up 1.7% to $10.10 cents in the past 90 days.

Boeing delivered average positive earnings surprise of 28.01% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has moved up 3% to $15.05 in the past 90 days.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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